Shrikishan and Company vs The Union of India (UOI) and Others

I.M. Quddusi, J.—Heard learned Counsel appearing for the writ petition as well as learned Counsel appearing for the respondents.

The petitioner, which is a registered company under the Companies Act, 1956, has filed the instant petition being aggrieved by the order dated 14-5-2010 (Annexure P-1), intimating the petitioner by the respondents/State that its bid has been considered as non-responsive in terms of Clause 4.5.3 (b) of ITB hence the financial bid of the petitioner will not be opened. The petitioner is further aggrieved by the order dated 29-5-2010 (Annexure P-2), intimating the petitioner that it has not been considered fit for review by the Evaluation Committee of MORTH, New Delhi, on its representation dated 14-5-2010, therefore, the financial bid of the petitioner will not be opened.

Brief facts of the case are that the respondent No. 3 invited tenders from the eligible contractors for the work of widening of two lane in km 0.00 to 63,650 on Tara Premnagar Ramanujnagar Krishnapur Road (Under LWE Project) vide NIT dated 19-2-2010 (Annexure P-3). The probable amount of contract was Rs. 6100.05 lacs.

Clause 4.5.3 of the ITB provides for General Experience which is quoted as under:

4.5.3. General Experience:

The applicant shall meet the following minimum criteria:

(a) Average annual turnover (defined as billing for works in progress and completed in all classes of Civil Engineering Construction Works only) over the last five years of 40 per cent of the value contract/contracts applied for.

(b) Experience in ''successfully completing'' at least one contract of highway (road and/or bridge works) airport runway of at least 40 per cent of the value of proposed contract within the last five years.

The works may have been executed by the applicant as prime contractor or as a member of joint venture or sub-contractor. As sub-contractor, he should have acquired the experience of execution of all major items of works under the proposed contract. In case a project has been executed by a joint venture, weightage towards experience of the project would be given to each joint venture in proportion to their participation in the joint venture.

Substantially completed works means those works which are at least 90% completed as one the date of submission (i.e., gross value of works done up to the last date of submission is 90% or more of the original contract price) and continuing satisfactorily. For these, a certificate from the employer shall be submitted along with the application incorporating clearly the name of the work, Contract value, billing amount, date of commencement of works, satisfactory performance of the contractor and any other relevant information.

Further, in the ITB Clause 4.5.4 provides for Personal Capabilities that the applicant must have suitably qualified personnel to fill the positions, mentioned therein. The applicant will supply information on a prime candidate and an alternate for each position, both of whom should meet the experience requirements specified therein.

The petitioner submitted the certificate regarding the experience, issued by the Executive Eingineer, P.W.D. Division No. 1, Raipur dated 10-6-2009. A perusal of the certificate shows that the contract value of the agreement for which the work executed by the petitioner was Rs. 21,41,97,625/-, out of which as on 31-3-2009 the petitioner had performed the work of Rs. 2198.69 lacs. The petitioner has also submitted a certificate dated 15-3-2010. A perusal of this certificate shows that the contract value of the agreement for which the work executed by the petitioner was Rs. 21,41,97,625/- but it had done the work up to 31-3-2009 to the value of Rs. 2248.69 lacs only. That too in regard to the work order dated 6-9-2006. Further, it is mentioned that the disposal of final bill is in progress.

The petitioner has also filed a certificate dated 16-5-2010 along with the rejoinder wherein it has been certified by the Executive Engineer, PWD Division No. 1, Raipur that in sequence of the earlier certificate dated 15-3-2010, payment of Rs. 2248.61 lacs has been made to the petitioner in regard to the work completed by the petitioner up to 31-3-2009. The petitioner has also performed the work of Rs. 24.37 lacs in April, 2009. According to this certificate from the year 2006 till the date of issue of the certificate, i.e., 16-5-2010, the petitioner has completed the work and got payment of Rs. 2273.06 lacs.

The technical evaluation committee in its meeting held on 10-5-2010 considered the technical bid of the petitioner and found that there was insufficient qualified personal and an intimation was sent by the impugned order dated 14-5-2010 (Annexure P-1) that as per the minutes of the meeting of technical evaluation committee for the work the petitioner is short 02 Nos. Site Engineers, 02 Nos. Plant Engineers and 01 No. Quantity Surveyor. The petitioner also does not possess the experience for successful completion of single work of value not less than 40% of the proposed work. Therefore, bid of the petitioner is considered as non-responsive in term of Clause 4.5.3 (b) of the ITB.

Here, it is to be noticed that the probable amount of the contract in the instant ITB was Rs. 6100.05 lacs. It was the condition vide Clause 4.5.3 -General Experience, that annual turnover for the last five years should be 40% of the value contract. The 40% comes to Rs. 24.40 crores but the petitioner had worked to the tune of Rs. 2248.69 lacs only as on 31-3-2009. Therefore, the work was treated as less than 40%. Besides, that due to the shortage of suitable qualified personnels also the bid was considered as non-responsive.

Learned Counsel appearing for the petitioner has drawn attention of this Court towards Clause 4.5.2 of the ITB which provides for Base Year and Escalation. It is mentioned therein that the base year shall be taken as (particular year to be mentioned). Following enhancement factors will be used for the costs of works executed and the financial figures to a common base value for works completed in India:

Year before Multiplying factor ------------ -------------------

One 1.10

Two 1.21

Three 1.33

Four 1.46

Five 1.61

Applicant should indicate actual figures of costs and amount for the works executed by them without accounting for the above mentioned factors.

As per the counter affidavit filed by the respondent No. I/Union of India, in Paragraph 4 it has been mentioned that the petitioner has enclosed the certificate dated 15-3-2010, obtained from the Executive Engineer, PWD Division No. 1, Raipur, in which it has been certified that the work amounting to Rs. 2248.69 lacs has been executed and the disposal of the final bill is in progress. Since it has not been certified that the work had been completed as on 31-3 -2009 and no actual date of completion of the work was mentioned in the above certificate, therefore, the year of completion of work, executed by the petitioner, was taken as 2009-2010 as the certificate was issued on 15-3-2010. Since the present bid is of the year 2009-2010, no escalation factor was applied to the value of the work completed during the year 2009-2010. In view of the above, it cannot be said that in not evaluating the value of the work executed by the petitioner, as above, by applying the Clause 4.5.2 of the ITB, the respondents have committed any irregularity.

Learned Counsel appearing for the respondents/State has drawn attention of this Court towards Clause 8.3 of the ITB which provides that the bidder is expected to examine carefully all instructions, conditions of contract, contract data, forms, terms, technical specifications, bill of quantities, forms, Annexes and drawings in the Bid Document. Failure to comply with the requirements of Bid Documents shall be at the bidder''s own risk. Pursuant to Clause 26 hereof, bids which are not substantially responsive to the requirements of the Bid Documents shall be rejected.

Clause 26 of the ITB is relevant and the same is quoted below:

Examination of Bids and Determination of Responsiveness.-

26.1. During the detailed evaluation of "Technical Bids" the employer will determine whether each Bid (a) meets the eligibility criteria defined in Clauses 3 and 4 (b) has been properly signed, (c) is accompanied by the required securities, and, (d) is substantially responsive to the requirements of the Bidding documents. During the detailed evaluation of the "Financial Bid" the responsiveness of the bids will be further determined with respect to the remaining bid condition, i.e., priced bill of quantities, technical specifications, and drawings.

26.2. A substantially responsive "Financial Bid" is one which conforms to all the terms, conditions and specifications of the Bidding documents, without material deviation or reservation. A material deviation or reservation of the works (b) which limits in any substantial way, inconsistent with the Bidding documents the Employer''s rights or the Bidders obligations under the Contractor or (c) whose rectification would affect unfairly the competitive position of other Bidders presenting substantially responsive Bids.

26.3. If the Financial Bid is not substantially responsive, it will be rejected by the Employer and may not subsequently be made responsive by correction or withdrawal of the non-conforming deviation or reservation.

Learned Counsel appearing for the petitioner has raised the objection that the technical bid was not rejected. In our opinion, intimating the petitioner that the bid is considered as non-responsive in terms of Clause 4.5.3 (b) of the ITB, amounts to rejection of the bid against which the representation was made by the petitioner on 14-5-2010 and the same was not considered fit for review by the evaluation committee of MORTH and it was communicated to the petitioner vide second impugned order dated 29-5-2010 (Annexure P-2) that the petitioner''s financial bid will not be opened. This also amounts to clear-cut rejection of the technical bid, and the petitioner was not found as qualified.

Learned Counsel appearing for the respondents placed reliance on a decision of Hon''ble Supreme Court in West Bengal State Electricity Board Vs. Patel Engineering Co. Ltd. and Others, , and further on a decision of the Apex Court in the matter of Global Energy Ltd. and Another Vs. Adani Exports Ltd. and Others, , where in Para 12, it was held as under:

The principle is, therefore, well settled that the terms of the invitation to tender are not open to judicial scrutiny and the Courts cannot whittle down the terms of the tender as they are in the realm of contract unless they are wholly arbitrary, discriminatory or actuated by malice. This being the position of law, settled by a catena of decisions of this Court, it is rather surprising that the learned Single Judge passed an interim direction on the very first day of admission hearing of the writ petition and allowed the appellants to deposit the earnest money by furnishing a Bank Guarantee or a bankers'' cheque till three days after the actual date of opening of the tender. The order of the learned Single Judge being wholly illegal was, therefore, rightly set aside by the Division Bench.

Hon''ble Supreme Court in Tata Cellular Vs. Union of India, , has explained what is a tender and what are the requisites of a valid tender. It has been held that the tender must be unconditional and must conform to the terms of the obligation and further the person by whom the tender is made must be able and willing to perform his obligations. It has been further held that the terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract.

Hon''ble Supreme Court in Air India Ltd. Vs. Cochin Int., Airport Ltd. and Others, , in Para 7 held as under:

The law relating to award of a contract by the State, its corporations and bodies acting as instrumentalities and agencies of the Government has been settled by the decision of this Court in Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, , Fertilizer Corporation Kamgar Union (Regd.), Sindri and Others Vs. Union of India (UOI) and Others, , Assistant Collector of Central Excise, Chandan Nagar, West Bengal Vs. Dunlop India Ltd. and Others, ,Tata Cellular v. Union of India (1994) 6 SCC 651, Ramniklal N. Bhutta and another Vs. State of Maharashtra and others, and Raunaq International Limited Vs. I.V.R. Construction Ltd. and Others, . The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bonafide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the Court can examine the decision-making process and interfere if it is found vitiated by malafides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making process the Court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should intervene.

Hon''ble Supreme Court in a recent decision in Meerut Development Authority v. Association of Management Studies and Anr. AIR 2009 SCW 4623, has inter alia observed as under:

...There is no difficulty to hold that the authorities owe a duty to act fairly but it is equally well settled in judicial review, the Court is not concerned with the merits or correctness of the decision, but with the manner in which the decision is taken or the order is made. The Court cannot substitute its own opinion for the opinion of the authority deciding the matter. The distinction between appellate power and a judicial review is well known but needs reiteration.

By way of judicial review, the Court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the State. Courts have inherent limitations on the scope of any such enquiry. If the contract has been entered into without ignoring the procedure which can be said to be basic in nature and after an objective consideration of different options available taking/into account the interest of the State and the public, then the Court cannot act as an Appellate Court by substituting its opinion in respect of selection made for entering into such contract. But at the same time the Courts can certainly examine whether ''decision making process'' was reasonable, rational, not arbitrary and violative of Article 14...

In view of the aforesaid discussion, no case for interference by this Court in exercise of extra-ordinary jurisdiction conferred to it under Article 226 of the Constitution of India is made out. The writ petition is misconceived and is therefore dismissed.

No order as to costs.